European winter power prices hit highest premium since 2022
Winter electricity contracts are trading at a 20% premium over next year's benchmark as shipping disruptions in the Strait of Hormuz limit LNG supplies. Low gas storage levels and the lowest hydrological balance in a decade are raising concerns about energy security for the coming winter season.
European winter electricity contracts are trading at an over 20% premium to 2027 benchmarks as gas and hydropower shortages threaten supply. This price gap is the widest since the 2022 energy crisis. For investors, the backwardation signals acute market concern that current storage levels cannot offset a prolonged disruption in energy flows.
### Gas Squeeze Strains European Storage The supply crunch stems from a standstill in shipping through the Strait of Hormuz following military action involving the United States, Israel, and Iran. Iran has blocked liquefied natural gas (LNG) shipments, removing about a fifth of global supply. This bottleneck forces Natural Gas markets into fierce competition between Europe and Asia for remaining cargoes.
